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Assocham for allowing 50 p.c. of small savings to buy PSUs' equity

Special Correspondent

Finance Ministry considering modifications in prototype acts

M. K. Sanghi

NEW DELHI: The Associated Chambers of Commerce and Industry of India (Assocham) has recommended that 50 per cent of the total small savings be allowed to be invested to buy government stakes in profitable public sector undertakings in which the UPA government is intending to create consensus for offloading some of its equities through the disinvestment route.

According to government estimates, the total number of collections garnered through small savings works out to Rs. 1,10,184.72 crore, 50 per cent of which is suggested to be permitted for buying government stakes in select PSUs by their investors after their maturity period.

The names of such schemes include: Savings Bank Account (SB), Recurring Deposits (RD), Time Deposit (TD), Monthly Income Schemes (MIS accounts, National Savings Certificates (NSS 92) and Public Provident Fund (PPF) accounts.

A paper on the "Small saving scenario and their prospective use for higher returns" was brought out by the chamber for submission to the Finance Ministry, which is considering to bring in modifications in the prototype acts that govern the small savings.

The chamber President, Mahendra K. Sanghi, stated in the paper that if the suggested investment of the small savings was allowed, this would help avoid actual outflow of money from the government system and investors would also get a better option for re-investment.

The chamber feels that releasing the large amount of public resources that are locked up in the small savings segment will also boost the capital market as the latest trends reveal that a certain percentage of rural savings is also being invested in the capital market as also bullion trade.

With increased awareness for higher returns among investors, the government should discontinue forthwith most of its traditional ways for savings and bring in amendments and modifications in all savings related norms to enable small investors to look for avenues that might bring them higher returns and the money stays with the system.

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